Buffett's Berkshire Hathaway opening bond insurer

NEW YORK -- The license for Berkshire Hathaway Assurance will officially be approved no later than Monday.

Also on Friday, Berkshire Hathaway agreed to buy NRG, the reinsurance unit of ING Group said for about $435.7 million in cash.

Buffett's new insurance unit could take some business away from other insurers, said Donald Light, a senior analyst with Celent. Light owns Berkshire Hathaway shares.

Buffett will have the advantage of setting up operations with a strong balance sheet and a clean book of business, making his operation attractive for bond issuers, Light added.

Buffett's foray into the bond insurance sector comes at a tumultuous time for his new competitors. In recent weeks, bond insurers have come under fire as rating agencies have downgraded them, or warned of possible downgrades, because of their exposure to the deteriorating credit markets.

The rating agencies are worried the insurers will not have enough capital to cover potential defaults on bonds and debt backed by mortgages, especially subprime mortgages given to customers with poor credit history.

As defaults on mortgages have risen in recent months, rating agencies and investors have worried the bonds and debt backed by the troubled loans will begin defaulting as well, triggering payments by the insurers — which they ultimately might not have enough cash to cover.

Fitch said both MBIA and Ambac need to find at least $1 billion in additional capital by the end of January or face a downgrade from their current "AAA" ratings, while ACA said in a regulatory filing Thursday it has ceded some control of its business to a state regulator as it tries to survive being downgraded to junk status.